Tenants are facing steep increases in rents as landlords push prices back to levels not seen since the start of the economic slowdown, according to the LSL monthly index of buy-to-let rents.

The worst increases are in the south-east where, according to LSL, in just one month alone landlords have pushed up rents by 2.8% – far outstripping wages. London also saw a 2% rise during August, with the average charged now standing at £961 a month. Over the year, the Yorkshire and Humberside region has suffered the biggest annual rise, up by 5.4% to an average of £528.

Rising rents are forcing many tenants into arrears. LSL estimates around 507,000 in the UK are now behind with payments, up 70,000 on the month alone. It said arrears stand at 11.3% of all rent in the UK, compared to 9.7% in April. LSL is the largest residential letting agency in the UK, operating under brands such as Your Move and Reeds Rains.

The increase in arrears was largest in the north-east, where unpaid rent rose from 10% in July to 14.4% in August. LSL said the rise may be connected to public sector cutbacks, with the north-east most exposed to government cuts and economic hardship.

Behind the increase in rent is supply and demand – which is currently strongly in favour of landlords. LSL said the number of "accidental landlords" who put their properties up for rent when the market froze during the financial crisis has now fallen back, decreasing the supply of properties on to the market.

Meanwhile, first-time buyers, squeezed out of the purchase market as they cannot stump up sizeable deposits demanded by lenders, are switching to renting, instead.

David Newnes of LSL Property Services said: "Rents are jumping up as more and more potential home buyers opt to rent. People are wary of a crash in house prices and concerned over the effect of government cuts on their own ability to meet long-term financial commitments. Additionally, many can't get a mortgage at an affordable rate. Furthermore, the huge number of reluctant landlords we saw renting out property last year have now had the opportunity to bank their gains and sell up. That's cut into the supply of rental accommodation.

"All these factors have shifted the power back into the hands of landlords, driving up rents."

The figures from LSL echo a recent report from the Royal Institution of Chartered Surveyors.

It found that a positive 26% net balance of surveyors were reporting an increase in demand for rental property, while 33% more surveyors predicted a rise in rents than a fall.

Demand for student housing was particularly strong, it said. The number of first-time buyers has fallen back considerably in recent years as access to mortgage finance has become tougher, and many are being forced to rent for longer instead.

A survey by the Council of Mortgage Lenders this week showed that the desire to become an owner-occupier is as strong as ever, but the means to finance it are more difficult than at any time in decades.

As more people are forced to rent, campaigning group Shelter says more are also becoming the victim of landlord scams. Its research found almost one million Britons have fallen victim to a scam involving a private tenancy or landlord in the past three years.

The private rented sector has increased more rapidly than any other tenure, with three million households now privately renting and predictions that one in five people will be living in the sector by 2020.

Campbell Robb, Shelter chief executive, says: "With more and more people set to become private tenants in the future, we believe these scams are a widespread problem that will create thousands more victims unless we urgently do something about it."